Companies won’t even look at the resumes of the long-term unemployed

Matthew O’Brien reports on a striking new paper by Rand Ghayad…The researchers sent out 4,800 fake résumés at random for 600 job openings. What they found is that employers would rather call back someone with no relevant experience who’s only been out of work for a few months than someone with lots of relevant experience who’s been out of work for longer than six months.

In other words, it doesn’t matter how much experience you have. It doesn’t matter why you lost your previous job — it could have been bad luck. If you’ve been out of work for more than six months, you’re essentially unemployable.

…This jibes with earlier research (pdf) by Ghayad and Dickens showing that the long-term unemployed are struggling to find work no matter how many job openings pop up. And it dovetails with anecdotes that workers and human resource managers have been recounting for years now. Many firms often post job notices that explicitly exclude the unemployed.

I think of this as further illustration of what I have called ZMP workers, a once maligned concept which now is rather obviously relevant and which has plenty of evidence on its side. It’s fine if you wish to label them “perceived by employers as ZMP workers but not really ZMP,” or “unjustly oppressed and only thus ZMP workers.” The basic idea remains and of course “stimulus” will reemploy them only by boosting the real economy, such as by raising output and productivity and reeducating, and not by recalibrating nominal variables per se. For these workers it is not about wage stickiness. Most by the way would not be ZMP if the U.S. economy were growing regularly at four percent in real terms, but of course that is not easy to achieve, not from where we stand today.

I’ve sometimes seen it hinted that calling them “ZMP workers” lacks compassion, but the compassionate thing to do is to try to identify the actual problem. A year or two ago I thought ZMP workers accounted for about 1% of potential U.S. workers (hardly all of the unemployment problem, I would stress), but if anything I am moving that estimate upwards.

I suggest “Zompies” has more of a ring to it. Doesn’t do much for the compassion thing though.

Curt F.April 15, 2013 at 2:58 pm

The study and the topic are important, but what struck me most about it is that the massive deception of hundreds or thousands of companies that these studies require.

1. The “participants” that looked at the fake resumes are “human subjects”.
2. Yet, they weren’t informed of and did not consent to be part of the study.
3. I wrote to Rand Ghayad to ask him about the ethics of massive resume fabrication. He wrote back to tell me that (a) this isn’t the first study of this kind and (b) he had to seek and did receive IRB approval for this research.

I knew that other studies had used this technique. Apparently one prior study along these lines was by Kroft, Lange, and Notowidigdo. They estimated that a firm must review 6 – 8 fabricated resumes as part of their study, which would supposedly translate to “at most’ 10 minutes of company time. The Kroft et al. study sent fake resumes to 3000 employers, meaning that 30,000 minutes of valuable HR staffer or other manger time was wasted by the study. For the Ghayad study that would be 600 firms, or 6000 minutes. That’s 100 to 500 *hours* of time wasted on forgeries by presumably somewhat well-paid HR or other management employees at these firms.

Do the folks who perform these studies pay for this time? What other studies are approved by IRBs that waste 100s of hours of person-time without the consent (or even knowledge!) of the “participants”?

I know the data generated by these studies has value, but it still seems wrong that the knowledge generated comes by massive deception. How is this resume spamming different than email spamming? How is it different than other forms of resume fraud, e.g. the famous case of former MIT employee Marilee Jones?

The linked research was carried out by medical researchers in Britain.

Andrew'April 15, 2013 at 3:28 pm

“He wrote back to tell me that (a) this isn’t the first study of this kind and (b) he had to seek and did receive IRB approval for this research. ”

That is THE answer these days. Better than the old days…I guess.

Andrew'April 15, 2013 at 3:29 pm

In other news, your degrees are apparently useless.

ad*mApril 15, 2013 at 3:42 pm

Very good point. It shows the difference between human subjects research by medical scientists, who often take months or years to get approved – including 5 years for some gene therapy studies, and by economists. For the former, these subjects are human beings, for the latter their subjects are just numbers to be manipulated.

Dismal *science* indeed.

maveryApril 15, 2013 at 4:24 pm

Chalk the lost time due to deception up to ZMR activities?

MichaelApril 15, 2013 at 4:40 pm

Business Insider looked into how much time was spent looking at each resume on the first pass. They concluded 6 seconds.

All in all, a percent of total time dealing with applicants, I doubt these studies amount to much more than a rounding error.

Curt F.April 15, 2013 at 5:01 pm

Yes, if you assume the people you haven’t told you were inconveniencing aren’t very inconvenienced, then they aren’t very inconvenienced. What percent of total time dealing with applicants do you think is fair to expect these firms to devote to being defrauded? Who gets to decide the answer?

blutoApril 15, 2013 at 6:52 pm

“valuable HR staffer…time”
Well there’s at least one issue with your concern. HR staffer time may be expensive, but it’s far from valuable.

dan1111April 16, 2013 at 1:15 am

Not all HR functions are valuable, but the activity of deciding which people to hire is hugely valuable to a company.

somaguyApril 16, 2013 at 1:24 am

Erm, what industry are you from?

EngineerApril 16, 2013 at 1:34 am

HR approaches for selecting and evaluating interviewees are horrendously outdated and inefficient.

Now that CVs are sent en masse or via web applications, HR is just too swamped to do anything other than rely on blunt instruments like previous employer or amount of time looking for work.

Then there’s the fact that many skill sets are too complex to be understood by HR.

mulpApril 15, 2013 at 7:08 pm

Ok,but what about all the fraudulent job postings, which certainly number in the millions over the past year. How do you detect the fraudulent job postings and fraudulent discrimination without systematic testing of the job market with responses which differ only in minor detail to reveal the employer or agency fraud?

I get deceptive mail from businesses daily all designed get me to waste my time to profit those businesses.

Law enforcement frequently uses fraud in their duty, eg, sending out notices of prize awards, or similar inducements.

Military tactics incorporate fraud and deception to get the enemy to waste resources.

Mystery writers are rewarded by readers for fraud, as long as the fraud is honest and true misdirection without lying, and reading fiction is all about “wasting” time – you make nothing and merely take……………………..pleasure

dan1111April 16, 2013 at 1:19 am

The fact that other fraud exists does not make this fraud ok.

And fiction is not fraud in any meaningful sense–come on, that’s just stupid.

RZ0April 15, 2013 at 3:01 pm

Calling these workers “ZMP” implies the problem is theirs. The whole point of the Northeastern study is to contradict that lazy assertion.

ClaudiaApril 15, 2013 at 3:17 pm

This!

“I’ve sometimes seen it hinted that calling them “ZMP workers” lacks compassion, but the compassionate thing to do is to try to identify the actual problem.” NOT this.

Pithy labels can be quite powerful. I assume that’s why you use them. It’s clear when you spell it out that you get the nuance and I suspect in your mind ZMP is a neutral, clarifying label. But it’s not really to many others. You say yourself how much the Z depends on the state of the economy. And you point out how the sluggish recovery has increased the number of Z’s. But the label doesn’t convey that so well. Also the compassionate thing (and the mandated thing) would have been to step up and DO something more in terms of policy. As this research suggests the unemployed worker has limited ability to solve this problem themselves. But yes, congratulations the long-term unemployed are rhetorically equivalent to your ZMP workers (I won’t ever use your term at work). You think you were the first to notice they were a pressing policy concern?

ad*mApril 15, 2013 at 3:45 pm

“and DO something more in terms of policy”. Spoken like a good liberal! Like making it ever less attractive to hire these people by increasing the minimum wage, ridiculous anti-discrinimation policies, and so many other bad things this Administration has been pushing.
But at least Obama is DOING something.

ad*mApril 15, 2013 at 3:47 pm

And let me add that I just hired a programmer who had been out of work for more than a year. But I would have hired more if the risk would not have been so great.

BobboApril 16, 2013 at 9:28 am

Oh please. Your type always hire the least amount of people possible no matter what. All the while clamoring for lower taxes and less regulations. The Dems are the closest thing America has to a workers party, although even they have to pay lip service to the FREE MURKET just like the corporate sycophants in the GOP.

MarxApril 16, 2013 at 12:36 pm

Get with the program, Bobbo. Real socialists are market socialists nowadays.

ClaudiaApril 15, 2013 at 4:08 pm

Not a liberal, thanks. My point was that compassion is not just thinking about others’ problems it is also acting to help them. I did not say this was easy but I do think policy is important when the shocks are broadly felt. Good for you that you don’t screen resumes on months out of work…you probably got a valuable colleague as a result.

Andrew'April 15, 2013 at 4:06 pm

“You think you were the first to notice they were a pressing policy concern?” Hmmm. Maybe he is. Do you know any politicians talking about this in practical terms? Know any academics talking in practical terms about much of anything? Why are there a few hundred million Chinese doing jobs that are ZMP over here?

ClaudiaApril 15, 2013 at 5:35 pm

No, he is not. If thoughtfulness were the only determinant of economic policy outcomes, I am sure the economy would have already hit the 4 percent growth forecasts. Sadly and but not surprisingly it is not. Also even if the mysteries of the “actual problem” are unlocked there is a long way to go toward a solution. And unfortunately long-term unemployment is a problem that tends to get worse with time.

Brian DonohueApril 15, 2013 at 4:31 pm

“Also the compassionate thing (and the mandated thing) would have been to step up and DO something more in terms of policy.”

Those last four words are key, of course. Don’t actually hire these people yourself, for God’s sake, use the magic of OPM. Now THAT’S compassion, THAT’S stepping up.

ClaudiaApril 15, 2013 at 5:50 pm

I chose my words purposely. As one example, the Fed has a dual mandate of promoting price stability AND full employment. So it’s their job to consider policy responses to the elevated unemployment rate. THAT’S as much stepping up as any private employer. Why does this turn into a government vs the firms discussion? … This is about productive individuals who are now out of work for a while with all the individual, family, and community repercussions that brings. If the unemployment rate were down at 5 percent I would agree with you that the market could probably just work it out for any long-term unemployed, but that’s not the hand we’ve been dealt.

Brian DonohueApril 15, 2013 at 5:57 pm

“This is about productive individuals who are now out of work for a while…” Well yes, define away the issue and it’s all very easy.

ClaudiaApril 15, 2013 at 6:02 pm

I did not define it away. I wish it were that easy … TC is clear they are not ZMPs in all states of the world (one reason I am not a fan of the label), I am choosing to emphasize their inherent productivity. I admit it may not be above the current high bar, but there are ways to address that deficit … or at least to try to address it.

dead seriousApril 15, 2013 at 6:30 pm

I love it. Right-wingers hate welfare cause lazy people. They also hate people who can’t get hired, even though they are apparently trying like hell to do so, because lazy.

At some point, you people should take a good long collective look in the mirror and just admit out loud that you’re a group of hateful motherfuckers.

BrandonApril 15, 2013 at 6:40 pm

It ain’t easy being a strawman!

dead seriousApril 15, 2013 at 7:59 pm

Just read the original post and comments. It’s not a straw man.

derekApril 15, 2013 at 11:17 pm

Indeed. We have someone in the White House who LOVES the unemployed. You know how to tell? He makes sure there are lots of them.

Seriously though, individuals are responsible for themselves. Things happen and people make bad decisions, decisions like putting off retraining, moving, whatever hoping things will get better. Or getting on the unemployment insurance track, looking for benefits and government help. Those things are fine but if they allow putting off tough decisions you can easily end up in a situation where you won’t get a job for a long long time.

I’ve lived most of my life in areas where unemployment has been high. I have yet to get a job by shopping out a resume, it always has been through some personal contact. This story doesn’t surprise me at all. Keep a bunch of opportunities available at all times, you might need them. Keep out of debt and live your life as if your job may disappear tomorrow. Know how your skills and abilities add value rather than expect someone else to pay your way. Don’t believe or trust anyone who tells you otherwise. Yes it is mean and ugly, but reality is that there are over a billion Chinese and Indians who are willing to work harder for less than we are. Like all business people we all have to justify our existence.

An anecdote. A friend had a business and was looking for someone for an office position. Small firm, less than 10 people. He advertised the position at a time when work was hard to get, and when he showed up in the morning there was a crowd waiting outside the office door. In the hundreds. He felt bad for these folks, but what could he do? They gathered resumes and sent everyone on their way. Never advertised for a job again.

I feel bad for these people, I have had friends who couldn’t get work and it was soul destroying. I am also in a position where I hire people and if someone doesn’t or can’t add value I can’t afford to pay them. There is this attitude in the US that somehow they deserve the wealth and standard of living that they have enjoyed for a long time, that it will just come to them. It won’t. There are lots of other places and other people hungrier and more aggressive, and are getting the benefits. Caring is meaningless bullshit.

dead seriousApril 16, 2013 at 8:53 am

I agree with mostly everything you wrote, but let’s not, on top of everything else, stigmatize these people with a “ZMP” label.

I mean, for Christ’s sake, Tyler has no clue what value these people have or what productivity they might bring to the table. Surely, *some* of the currently unemployed who were presumably working ten years ago might have been described as ZMP back then, but all of them? I don’t think corporations were that much kinder back in ’03 to be employing such legions of worker zombies out of the goodness of their HR hearts.

Thus the “perceived” qualifier that others have added, which I think is a lot more accurate but still not particularly flattering. Why not just say it’s a buyer’s market? Or that certain jobs have been outsourced and are never coming back through no fault of those displaced? It’s pretty easy to undercut someone when your cost of living is the equivalent of $20/day.

tt31April 15, 2013 at 3:27 pm

This seems right to me. *Maybe* the Northeastern study could be evidence of widespread ZPMP workers – Zero Perceived Marginal Product – but that would (or maybe I should say “might”) be a very different thing than ZMP workers.

GETApril 15, 2013 at 3:38 pm

If you were out of a job for over 6 months, then at some point you were out of a job for only a couple of months. The problem is, more or less, theirs.

subdeeApril 15, 2013 at 4:39 pm

Except that you were out of a job for only a couple of months a couple of months ago, when the economy looked different from the way it looks now.

And everyone has low points.

MichaelApril 15, 2013 at 4:51 pm

There was a huge disparity between the number of job openings and the number of applicants in the economy. 1 job opening per 20 applicants isn’t a bad general number (obviously, it varied by field, time, location, etc.) There simply weren’t enough jobs. If you were the 2nd best applicant, you’re still unemployed. If that happens for a couple months, then you get a stigma, and voila, you’re unemployable. Heck, you’re resume probably never gets a real look. Some computer sees the amount spent unemployment and your resume never even makes it to human eyes.

john personnaApril 15, 2013 at 3:03 pm

I believe it, or should I say I fear it, as an early retiree. I might think I’m good, but it will be hard for me to differentiate myself, should I try to reenter the labor market. “Currently working” is just too convenient a filter for employers to use.

Travis OrmsbyApril 15, 2013 at 3:04 pm

It really does make a difference if the workers are “Perceived as ZMP by employers but not really ZMP” or whether they are actually ZMP. If they are not actually ZMP, businesses can improve output by hiring them even with low real growth rates of 1%-ish.

I see a lot of public choice type arguments about government workers, but you could just as easily apply those types of arguments to hiring managers whose personal incentives may not align particularly well with shareholders’ interests. How many hiring managers get penalized for being too conservative in hiring new workers? Compared to how many get penalized for being too aggressive?

albatrossApril 16, 2013 at 9:58 am

There’s another problem here. Long-term unemployment can have a lot of explanations, including many that have nothing to do with your worth as an employee. But many also do have something to do with how you will do at your next job. There’s a correlation between being long-term unemployed and being a bad employee–not necessarily a strong correlation, but it’s there. A similar statement applies to having bad credit (which may be due to a run of rotten luck, but may also be due to your drug habit), having a prison record, having a GED instead of a high school diploma, etc. If there is a big enough pool of workers, and I need a “good enough” worker rather than a great fit for this job, why isn’t it sensible for me to use all those noisy-but-better-than-nothing signals to thin out the pile of resumes I have to examine?

This is a very general problem–what do you do when there’s some form of discrimination that is both socially damaging and individually rational? You can make it illegal to consider–that’s what we do for race and gender discrimination–but our experiences there show that enforcement is not easy or cheap, and I would expect mandates from on high about whom to hire and what criteria to use to be the result of political negotiation, and so not necessarily the least bit sensible.

john personnaApril 15, 2013 at 3:09 pm

Other than that, I think one can take the argument against “Kruuuugmaaaan!” too far. It is one thing to say that an aggregate demand shortfall is not the whole picture, or that stimulus will not fix everything. It is another to suggest that the 2007 crash produced no reduction in demand, or that stimulus in that era was without merit. Personally, I can believe that the crisis was real, but that the short run is over, leaving an overhang … including in long-term unemployed, some with reasonable talents, who are choosing more frugal lives. It might even be mood affiliation to ignore that real history.

Andrew'April 15, 2013 at 3:13 pm

Education…come again?

Anyway, why do I get the feeling that the ZMP is an independent variable? The ZMP part should be a mathematical result of the micro and macro.

Andrew'April 15, 2013 at 3:58 pm

On what margin are they ZMP? Profit and loss?

The time unemployed thing is odd. We don’t care if you just got fired for stealing, but we implicitly trust all the judgments of the people who ostensibly chose not to hire you during a depression.

Or are hiring managers just rock dumb?

ChrisApril 15, 2013 at 9:49 pm

Not rock dumb just awash in information in the form of resumes and in search of heuristics.

Overheard at a hotel bar in Nashville Saturday night, bartender to unemployed friend: “it doesn’t matter if you’re qualified, just apply to as many jobs as you can every day! It’s a numbers game. “

mdbApril 15, 2013 at 3:21 pm

As an anecdote, I know/knew 4 long term unemployed. 2 used the time to go back to school, both found jobs before their studies were over. 2 did not, they were also not very motivated to get a job, I do not know if they turned down interviews and job offers during the first year and half, but it would not surprise me – they enjoyed their “sabbatical”. Now, certainly not every long term unemployed were like these 2, but if the number is around 30% of the long term unemployed (which would not surprise me) I think it justifies employers caution.

Shane MApril 15, 2013 at 3:35 pm

My thoughts were also along this line also. If you don’t need the money there can be a substantial reorientation time in figuring out what to do with your life next. Some folks say they love their jobs or at least are content with it, but it’s pretty easy to find out that we may not love our job as much as we think after we’ve been away from it for a while. Personally I don’t know if I could be as good of an employee now as I was previously given fresh perspective. It would take more effort on my part to get into the right mindset. Employers could be right to be hesitant in that regard. all imho.

RalleyTandApril 15, 2013 at 3:39 pm

Why is anyone unemployed for six months? There is always something you can do. A few weeks maybe, but at some point you can stack shelves, serve in a restaurant, clean floors, sell door to door. (I’ve done half of these things, my wife has done the others. We each have a couple of degrees but when we were short of work we took what we could, no matter how menial.) What a resume that has no work for the past six months signals to me as an employer is that the subject of the resume can’t really be bothered to work. I will usually talk to someone whose CV shows a person with energy, I don;t really care too much where they’ve shown it. But the willingness to get off one’s backside and apply oneself is surprisingly rare. Folks with degrees from fancy universities are the worst offenders. I know so called risk management specialists who’ve lost their high paying jobs who complain they can’t find any suitable work. The possibility that they have never done anything useful in their entire lives but merely depended on government subsidy and gouging the taxpayers seems not to have occurred to these folks.

PhillApril 15, 2013 at 3:46 pm

I have a feeling that if somehow the bottom fell out of the market for software engineers and I took my gumption with me to McDonald’s that I wouldn’t be comfortable listing that stint cooking burgers when looking for a new job.

MDApril 15, 2013 at 4:49 pm

+1 If I saw “McDonald’s cashier” on a resume for an associate attorney position, I would wonder what the hell that person was thinking putting that down.

billApril 15, 2013 at 6:23 pm

I have heard the exact opposite from hiring managers. Putting menial work or even volunteering on a resume shows you have character and work ethic.

MDApril 15, 2013 at 7:24 pm

I think there is a big difference with noting that you did volunteer work for a legal clinic, and stating that you worked in fast food. Menial work screams “I couldn’t get unemployment because I was fired for cause.” No one wants to hire a drunk or a liar.

derekApril 15, 2013 at 11:22 pm

Maybe you could look at it as research. McDonald’s is an interesting example where they have an immense supply chain, systems and procedures that make it possible for a bunch of pimply 16 year olds to sell millions of hamburgers.

Much of the software that I have tried shows very clearly that the folks who designed and wrote it never actually did any real work with it.

John ProgrammerApril 16, 2013 at 2:46 pm

> Much of the software that I have tried shows very clearly that the folks who designed and wrote it never actually did any real work with it.

Liar.

Sebastian HApril 15, 2013 at 6:29 pm

a) McDonald’s wont hire you if you last jobs made 50k more than that one
b) even if you could magically get past a, which you can’t, hiring managers for your old jobs aren’t going to like it.

billApril 15, 2013 at 7:05 pm

“McDonald’s won’t hire you”

I’ve worked for minimum wage in between jobs and hiring managers love people who are overqualified. Do you know how many deadbeats, ex-cons, and loons they are forced to hire, because it pays so low? A smart, hard working person is like a gift to them.

BobboApril 16, 2013 at 9:37 am

Go to bed, grandpa

JLKApril 15, 2013 at 3:43 pm

Workers in their 50s who got laid off in 2007-2010 have a tough road. Locked into a region by social capital, and perhaps housing-bubble real estate issues. Aging parents and college-aged kids a factor. Shorter time period to recoup training/education costs. Perhaps with a career in sectors that fell victim to “recalculation” — housing, finance, real estate, others — or perhaps merely casualties of AD shortfall. Some observers might be surprised that many of them lacked full tenure.)

Call them Zero Bargaining Leverage (ZBL) workers?

RalleyTandApril 15, 2013 at 3:50 pm

What difference is there between “social capital” and “ego” or “vanity”. Perhaps all that is happening is that a bunch of Westerners who’ve been overpaid for their entire lives (or overfunded by profligate governments) are seeing their social capital expropriated and handed to equally deserving folks in less salubrious parts of the world. It’s not obvious that there is anything at all wrong with this. It might even be a very good thing.

asdfApril 15, 2013 at 4:16 pm

Thank you for putting the Tyler’s of the worlds opinion of their countrymen front and center. We can only hope some of these unemployed workers lynch traitors ans slavers like you.

The HowlApril 16, 2013 at 2:41 am

Wow. I must say, I’ve been reading MR for a long time and I’ve never (until just now) run into a comment that made me think “this is the most venomous thing I’ve ever read on MR.”

John SkookumApril 16, 2013 at 11:18 am

This is the same mentality that sacrificed virgins to appease the Volcano God. They have always been with us and always will be.

albtatrossApril 16, 2013 at 10:03 am

Next, we need a theory of Zero Marginal Product commenters on blog posts.

JLKApril 16, 2013 at 1:54 pm

I don’t think we are using social capital to mean the same thing. I am thinking of the neighbor kid I pay to feed our pets while we are away, and his mom watches my kids when they play outside. Or friends who would lend me a tool or help me carry a couch upstairs. Friends to drink beer with (not on Skype). Personal connections and trust that contribute to happiness and form only slowly with shared experiences. Bowling Alone, etc. It really has nothing at all to do with being overpaid or in the West.

I think this is a great idea, Ralley Tand. For example, Tom Friedman gets 60+ acres in Bethesda MD for editorials that you can literally program a computer to write. (No kidding.). There are a lot of equally deserving folks in less salubrious parts of the world, even in nearby Baltimore, who could make good use of that acreage, and a few of his extra bedrooms as well.

You could lead by example, Ralley Tand. You probably have female family members with great genetics and refined tastes who’d make wonderful mothers for a whole brood of children who could be sired by a hardworking, equally deserving Zulu or Papuan tribesman. Why should you and your female family members indulge your selfishness thru assortative mating? I say get them a one-way plane ticket and they can get busy.
____________________________________
People like you and others on this site are very good arguments for anarcho-capitalism, and not in the way you think.

Since the elites of the current Western nations are so blatantly contemptuous of their countrymen, these nations should be abolished so people can get about the process of creating their own..

mwApril 15, 2013 at 4:03 pm

I’m pretty Tyler has never acknowledged the possibility that ZMP is a *product* of long-term unemployment, rather than the latter being a symptom of the former. Such an acknowledgment would of course be tantamount to admitting that we as a society *created* this problem by allowing them to become long-term unemployed in the first place when the recession hit. Hence, its unattractiveness to a certain mindset. Although you have to admit, it is coincidental that you find your estimate of the number of ZMP workers rising, as it just so happens that the # of long-term unemployed rose over the first few years of the recession as well, dontcha think?

Andrew'April 15, 2013 at 4:07 pm

So, you can destroy 12+ years of education on the first day of your 7th month of unemployment? Somebody’s not telling us the truth.

Tyler CowenApril 15, 2013 at 4:10 pm

mw, read for instance my long post on labor market hysteresis…

mwApril 15, 2013 at 4:38 pm

Yes, and the gestalt of your thinking I take from that post, and others, is that the channel through which you view long-term unemployment yielding ZMP is primarily skill loss. And perhaps the *expectation* of skill loss does in fact drive employers’ resume-consuming tendencies, but since of course skill loss isn’t *necessary* for the outcome, coupled with the silly 6-month threshold, it strongly suggests that such real skill effects are secondary to the perceptual effects, at least in this country. And yes, the North/south Italy comparison of ZMP norms you cite, but, whether or not you agree, this is probably most commonly interpreted in light of the very real tremendous baseline differences in skill between their two peoples…

JStCApril 15, 2013 at 4:07 pm

hence..amnesty to all unemployed….of all their debts and dues

maguroApril 15, 2013 at 4:32 pm

Amnesty? Why yes, there will be amnesty. But not that kind.

Bryan WillmanApril 15, 2013 at 4:29 pm

I actually take a much darker view of the remedial measures required. Given studies that show all sorts wild discrimination against people with ancient and minor criminal records, that all sorts of bizarre mechanisms can be used to be disciminate against minorities, and so on – why should we think that employers would not find ways to say “currently employed only” until true labor shortages appeared? Given the pool of unemployed college grads, it would seem a possibly practical policy is to say “we’ll hire people away from other stable jobs”. [There are obvious limits and issues with all of this – my point is that employer behavoir is proven very stubborn over and over again.]

MDApril 15, 2013 at 4:51 pm

“currently employed only”

Employers already use that on job listings.

FEApril 15, 2013 at 4:56 pm

Let’s focus for a minute on the “applicants” who did get called back. One conclusion we could draw is that these are jobs for which experience simply isn’t very important. The employers are selecting for other qualifications. Query how many jobs are like that.

jtfApril 15, 2013 at 5:11 pm

Doesn’t this seem like a classic market for lemons reaction? If you separate those who are justifiably first-time jobseekers, you’re left with a pool of people that includes some truly <=ZMP workers and some truly productive ones. I don't quite know why Tyler is revising his estimate of ZMP workers upward, because it seems to me that it only requires a small percentage of workers to poison perceptions.

ChrisApril 15, 2013 at 9:56 pm

+1

Information asymmetry results in market failure. We need a carfax for long term unemployed.

dirkApril 15, 2013 at 5:27 pm

Not a good thing for me to read today. Should I lie on my resume now?

Steve JApril 15, 2013 at 7:00 pm

Looking at reactions to my comment here apparently a lot of people think yes:

I see a lot of arguments that employers shouldn’t exclude the long-term unemployed because a large number of the long-term unemployed would actually be good employees. I disagree. To evaluate whether discrimination against the long-term unemployed is rational, you have to look at the effectiveness of other methods of screening applicants. In my experience, it’s very difficult for an employer to identify quality employees on the basis of a resume and an interview, and most HR departments don’t have terribly effective screening processes. My guess is that (1) long-term unemployment is an extremely flawed measure of the quality of a job applicant and (2) it’s still better than any other method employers have found. The problem may be that the long-term unemployeed are perceived as being ZMP, but that perception isn’t necessarily irrational.

Maybe a better solution would be to focus on giving employers a better tool for identifying good employees among the long-term unemployed. Subsidizing apprenticeships might work. It’s probably more effective training than classroom education and it would give employees a performance track record for employers to review.

anonApril 15, 2013 at 7:51 pm

+1

The inability to identify only good workers / colleagues in advance is one big reason why many small companies go temp to perm.

The last person our small biz hired perm had no college degree, had been unemployed for more than 6 months, and told us he could not get even 1 interview. After 3 months as a temp we hired him and he has been (over the 8 months since) an excellent worker and a fantastic colleague.

Isn’t the implication that we should do more to encourage the employment of the unemployed in the short term?

JohnApril 15, 2013 at 6:34 pm

If you cannot work I suppose there’s no escaping the fact you will be a zero marginal productive worker. That seems a rather trivial insight and I would suggest that the implication of the story offered — out of work 6+ months and don’t bother applying — suggests the potential of market failure.

How is tenure in the labor force distributed within the long-term unemployed? If, as the story implied, even with significant experience HR departments are not looking at these potential candidates there’s likely to be a lot of those $5 bills lying around waiting from a good entrepreneur to take advantage of.

Of course the other side is that resumes typically are over stated and there’s no penalty for lying — you might not get the job if you cannot BS well enough but you got your foot in the door. Maybe this is just the poorer equilibrium in the multi-equilibria economy we face with less than honest resumes.

yiApril 15, 2013 at 6:39 pm

You can’t lie on a resume anymore. They all use employment verification services. Even low end retail jobs.

AlvinApril 15, 2013 at 7:25 pm

Of course you can. If you worked somewhere from, say, 1/1/2012 – 3/1/2013, you can get away with saying 1/1/2012-5/1/2013 (or longer). It’s your word against theirs.

If new prospective employer questions you, you stick to your guns and say “I was there until May 2013, the HR department (of former employer) is mistaken.” Or if you quit on 3/1/2013, you say, “I gave notice on 3/1/2013, but I worked through 5/1/2013.” They’re not going to find out the real truth. They’ll believe you if you sound convincing and stick with your story.

You can do the same with the start date. “I started working for them on 11/2011, but didn’t come on board with full benefits until 1/1/2012.”

Steve JApril 15, 2013 at 7:04 pm

Well I guess we don’t have to wonder why there is wage stickiness anymore. I’ve never thought the people in HR knew what they were doing.

whatsthatApril 15, 2013 at 7:22 pm

Fake resumes are easy to discover with the internet.

Maybe the reason they are calling people with no experience is that it is more likely these people have no internet presence.

Further, if there is someone claiming to have experience, but your network informs you no such person exists, the result the authors get are only to be expected.

One always takes the best candidate that they can get. So you may prefer a candidate who has no breaks in his work history but you take the best that you can get. It is the same with experience and education. We need more demand for labor, that is all.

Typhoon JimApril 15, 2013 at 7:40 pm

I’m thinking that a good business idea is a fake-job service that you pay a few bucks a month for. When you lose your job, you’re immediately “hired” there, with a contact number and someone who will give evasive HR-department answers to questions to verify employment at a telephone number.

My Own Jaundiced View is that the Most Qualified Person Almost Never gets hired, and, if you’re more qualified than the Person Doing the Hiring, you haven’t got a Chance in Hell.

Mike HApril 15, 2013 at 10:03 pm

Indeed. Consider that a lot of resume screening are done by low level clerks who don’t bear management responsibility and who have a vested-interest in preventing the hiring of more productive colleagues (to avoid losing job or promotion opportunity to them). This happens especially often in some poorly-managed mid to small size businesses where a dedicated HR department is lacking.

I think this is also one of the reasons why inexperienced recent workers are preferred over long-term unemployed with great prior experiences.

derekApril 15, 2013 at 8:16 pm

I wonder if the folks who came up with 99 weeks unemployment insurance knew about this?

CiceroApril 15, 2013 at 8:30 pm

Talk about the fatal conceit of economics: theory colors and even trumps empirical data. If they were laid off they must have had zero marginal productivity or else the companies wouldn’t have done it. Really? The managers making these decisions are perfectly rational actors with perfect information working exclusively for the benefit of the firm? This kind of thing is pushing me more and more away from economics and toward sociology. Anecdotal but Cisco has laid off thousands in the last several years (despite sitting on 45B in cash and making $10B a year in net income) and entire groups have been laid off (including presumably workers with high or potentially high productivity) while others (presumably including lower productivity workers) have been unscathed. Work performance is notoriously difficult to measure in professional jobs. Managers have cognitive biases and personal/political/emotional motivations when making these decisions. It is very common for a worker to get one performance rating in a job, have a change in manager, and then almost immediately be perceived at the opposite end of the spectrum of productivity than the first manager put them in. And oh, by the way, when groups are hit but not completely eliminated, the older workers (in tech that means over 40!) are much more likely to be cut. Do they really have lower productivity?

blutoApril 15, 2013 at 9:35 pm

I’m surprised that it’s hard to understand that everyone knows that all long term unemployed aren’t ZMP employees, rather that the odds of getting a ZMP worker from the long term unemployed is drastically higher and automation raises the bar constantly. Additionally, there’s little benefit to taking a risk in hiring since growth is currently so slow.

dead seriousApril 16, 2013 at 9:02 am

Is it an impossible model that a company would pay a long-term unemployed person (who they identify as hire-worthy) less than market value as an offset to that risk?

Wages, like home prices, are sticky until they’re not.

CiceroApril 16, 2013 at 10:53 am

A nice attempt to rationalize the situation but this does not address the core claim. TC’s argument, if you read the prior links on ZMP workers as well as his comment that he has to revise upward his estimation of the percentage of them in the workforce, implies people laid off generally “deserve” it in that they are the lower productivity workers. I assert that this is not necessarily true. Furthermore, hiring someone with zero experience over someone who has survived in positions for years makes the argument problematic if not necessarily completely disproving it. Institutions and markets are not perfectly or even largely rational – they are heavily influenced by other factors (which I listed above) – and we therefore have a situation that is neither efficient nor just.

Hazel MeadeApril 16, 2013 at 1:05 pm

There might be rational reasons to hire someone with zero experience. Maybe more experienced workers are more rigid in their approach to their work. Maybe you’re looking for fresh ideas. Maybe you want a fresh college grad to get the most recent technical knowledge.

That said, I do think you are correct that current HR practices irrationally filter on factors that shouldn’t carry as much weight as they currently do.

Mr. EconotarianApril 15, 2013 at 8:44 pm

Perhaps employers believe in the strong Efficient-market hypothesis – if you see an unemployed employable person, it is impossible, because some other employer would have hired them first…

Mark V AndersonApril 15, 2013 at 9:11 pm

There is an amazing lack of compassion in these comments. I hate to use that term, because it’s such a lefty one, but people are really nasty here.

A friend of mine was out of work for a couple of years, and I know he was a good worker because he had previously worked for me for several years. He mainly wasn’t a very good interviewer, and so in the bad economy he was consistently the number two or three candidate in several interviews he had. I think he may also have had some poor strategy, because eventually he should have looked for a lower level job at some point, to get back into a job. Of course that doesn’t always work either, because many times employers don’t want the over-qualified, because they’ll leave in a few months when they find something better. I also thought he could have done a better job on his resume to hide the lack of work. He was working part-time delivering papers and did some consulting in his profession. He should have exaggerated these jobs to make them look like they were full-time. But his mistakes in looking for a job in no way indicated his lack of skills in doing one.

By the way, that’s how you successfully lie on your resume. You don’t change something that is easily verifiable like the date you worked somewhere. You change a part-time job to full-time, you insert a time period of consulting even if it consisted of one job for your brother-in-law, or you say you were in school increasing your value to the profession.

My friend finally got a job with the state last year, which apparently doesn’t decline people who’ve been out of work for six months. The state does do something right. He does make a lot less than he did, but he is building his resume again.

I do not want the government to do anything special for these long-time unemployeds. As someone mentioned, that would be the kiss of death for many workers. Just as affirmative action increases racism by creating the suspicion that Blacks can’t get jobs without a quota, special treatment for the long-term unemployed would put even more of a taint on these workers. It is true that many of the state programs that already exist make these long-term unemployed that much harder to hire. Temporarily working for free or low pay is often illegal. Putting out one’s own shingle as a business often runs afoul of licensing laws. But the biggest reason for this problem is simply the high unemployment rate. As many have stated, HR doesn’t have a clue how to find good workers, so when there are lots of candidates the employment gap is one way they filter candidates.

Jeff MorganApril 15, 2013 at 11:24 pm

Surprised no one has mentioned that a whole lot of 20-somethings are so-called ZMP, based on this. Yes, they would be offended that assumptions are being made about their productivity.

Their productivity should actually be lower than experienced workers, but it’s not like they have access to productivity increases (experience).

mishkaApril 16, 2013 at 12:03 am

I was unemployed for 9 months. With a stellar resume and great track record in financial industry, with education (very technical) and experience to die for… By the end of that term I was starting to panic. When I asked a few headhunters directly, why the hell I cannot get any decent position, the answer was uniform: there can be only one king of a hill, and most places already have one. In other words, once you gain too much seniority, landing a new job is not easy: no one would hire you below your perceived level, and there are too few openings at or above. ZMP all the way. Oh, I was just below fourty.

anonApril 16, 2013 at 10:43 pm

Some of the advice of Nick Corcodilos (“Ask the Headhunter”) was helpful to me many years ago:

What were the job openings? I can’t tell from the brief. Recalling that the unemployment rate for those with a bachelor’s degree has been something like 4% through the whole recession, long-term unemployed graduates probably do have something wrong with them. But if the job openings were for construction workers, then the unemployment criterion is too picky.

EdApril 16, 2013 at 3:39 am

I think there are too problems here. The first is the gap between the number of jobs and the number of job-seekers.and the second is the selection process used by private sector hiring managers to select who gets to have a job and who stays a job-seeker.

The more serious problem is the first problem. If the demand for jobs is lower than the number of people seeking jobs, until these numbers converge you will have a certain number of people without jobs. This doesn’t change whether they are high skill people or low skill people. In terms of government policy, its better to look either for ways to increase the number of jobs, or to take more people out of the labor force (hopefully by putting them on welfare!).

Who gets the jobs matters because if private companies develop a habit of hiring incompetents and an aversion to employing competent people -due to bad labor laws, overreliance on computer software, incompetent people in HR, cultural taboos, office politics, or simple prejudice- then this is bad news for anyone having to deal with these companies. Taken too far, over time the situation sort of corrects itself with the development of an informal economy. If something like this is happening, its important, its just a separate problem, hard to measure, and hard to solve using government policy mechanisms. A think a way to measure this is to track the goods and services the private sector produces over several decades. A marked deterioration -or improvement- could be due to a simple change in hiring practices. You could start with professional sports, where teams often change their scouting philosophies and develop new sources of talent.

If companies are in fact hiring competent people for their small number of openings and accurately excluding the less valuable workers, you have better companies and more hope that they will become more profitable and take on more labor of all types in the future. However, for the time being the problem remains of having a large group of people who are unable to sell their labor for rent money. So on the employment front not much has changed. Giving these workers lots of training so that they are every bit as qualified as the workers who find jobs will not help if demand for labor has not increased -it just leads you with a situation where training can not be used as a discriminator in hiring decisions (and in turn actually increases the risk of a society where being competent decreases your chances of finding work!).

(I’m excluding discussion of how the government conducts hiring. A situation where government hiring policies and private sector policies diverge, so one sector is much more willing to hire competent people than the other, I don’t think is that uncommon, but either situation is unhealthy)

I would also suggest that “excluded workers” or “untouchable workers” is a more accurate and more value-neutral term for what Tyler seems to be getting at.

Being unemployed is not the worst thing in life. As long as you can live off savings or stay with parents, you may as well use that time to study, learn a new language or learn another skill. Much better than working for somebody else.
Employment is overrated.

BobboApril 16, 2013 at 9:56 am

Said someone who has never faced financial hardship.

axaApril 16, 2013 at 10:09 am

It’s nice to be under 30…..then life get’s nasty =)

albatrossApril 16, 2013 at 10:15 am

DNFTT

regularjoeskiApril 16, 2013 at 11:26 am

Isn’t ZMP worker just a function of cost-productivity? As an employer the problem is on the cost side. If it were legal to hire for 90 days at below minimum wage without benefits more people would be willing to try the long term unemployed. Mostly small/entrepreneurial business. Large corporations with HR seem to hire by signalling factors not actual skills. Reduce the costs to employers and they are not ZMP workers. BTW-my most profitable hires were a long term (10 years) unemployed due to health and a “known” SOB in the industry who no one else would hire.

Hazel MeadeApril 16, 2013 at 12:53 pm

I am failing to see how there is any connection between “ZMP” workers and “long-term unemployed” workers, which everyone seems to making a direct leap between.

While of course, many employers might assume that long-term unemployement signals lower productivity, that’s not only not necessarily true, it’s also not the only factor that might make someone “ZMP”. A worker could be perceived to be ZMP for lots of different reasons. The problem with the long-term unemployed seems to me to be not so much that they are perceived to be ZMP, but the practice of filtering out unemployed and long-term unemployed at a low level often via automated processes. Of course firms HAVE to filter, otherwise they will spend way too much HR time on the search process, and the filtering thresholds would probably be lower if there were fewer applicants. But the filtering is meant to narrow the list of candidates for specific positions, it’s not (in any meaningful way) an evaluation of the worker’s marginal productivity. You’re looking for the best candidate for the job, not the first candidate that has a maginal productivity greater than 0. You might filter out the long-term unemployed just to get the list of resumes you have to review in detail down to a managable number, that doesn’t mean you’re judging the long-term unemployed as necessarily unproductive. Just “probably not on the short list”.

I know this if off topic but I’m looking into starting my own blog and was wondering what all is needed to get set up? I’m assuming having
a blog like yours would cost a pretty penny?
I’m not very internet smart so I’m not 100% positive. Any recommendations or advice would be greatly appreciated. Kudos

sp6r=underratedApril 17, 2013 at 4:39 pm

Tyler Cowen’s economic perspective:

1. Tolerate a massive crash in the economy that leads to unemployment spiking.
2. 2009/10: Government shouldn’t rush in with monetary/fiscal stimulus because it is likely to be inefficient
3. 2009/10: Downplay research that once someone becomes long-term unemployed it becomes impossible for them to get a job.
4. 2011-Present: State long-term unemployed have no value and are the scum of the Earth.

Basically the developed world did what Tyler wants which is tolerate high cyclical unemployment and now he has the gaul to attack the victims of this policy. I hope he gets cancer and dies.

Its like you learn my thoughts! You seem to grasp so much approximately this, like you wrote the book in it
or something. I believe that you just could do with some percent to force the message home a bit, however instead of that,
that is excellent blog. A fantastic read.
I’ll definitely be back.